American tourist Shawna Wilson says she wore four dresses at the luxury department store La Samaritaine, owned by LVMH, in Paris, tempted by prices when the euro reached parity with the US dollar.
The euro plunged below $1 for the first time in two decades on Wednesday amid fears that rising energy prices from the conflict in Ukraine could plunge the European Union into a protracted economic crisis.
“It’s like it’s for sale here,” says Wilson, 49, of Colorado, who bought two dresses for her daughter. “Because the euro and the dollar are about the same, it certainly encourages us to spend.”
The weak euro is attracting many tourists, especially Americans, who are identified as a key growth engine for Europe’s luxury goods sector in the second quarter, according to analysts at Barclays.
The strong dollar against the euro contributed to a fourfold increase in tourism spending in Europe compared to last year in June, with spending by Americans accelerating, analysts at UBS said, citing data from VAT refund provider Planet. .
The luxury sector has quickly recovered from the pandemic as people rushed to spend money they had saved during the lockdowns – buying treats for themselves as socializing resumed.
But sales in China, the world’s largest luxury goods market, have plummeted this year as another wave of strict COVID-19 lockdowns closed stores, slackening demand and also meant less expensive Chinese tourists came to Europe.
So as Americans fill transatlantic flights, their eagerness to cash in on the weak euro is helping to replace the lost business due to the lack of Chinese visitors, which were the main source of luxury sales growth in Europe before the pandemic.
Luxury goods companies Richemont (CFR.S) and Burberry reported higher sales in Europe on Friday, helping to offset a more than 30% drop in China.
France has benefited the most from the excesses of the tourists.
Tourist sales in France rose to just 11.3% below 2019 levels in June, a positive sign for French luxury labels that have high exposure to their home market, UBS analysts said.
American tourists flocked to Paris’ Avenue Montaigne this week, browsing luxury boutiques including designer names such as Louis Vuitton, Chanel and Gucci.
Cheryl Penn, 70, a real estate agent from Delray Beach, Florida, had already bought herself a skirt and stocked up on baby clothes for her granddaughter.
“We just got on the Avenue, so we just started shopping,” Penn said.
“I like that the euro and dollar are the same, so I know exactly what I’m spending,” she said.
Jennifer Groner, a TikTok influencer, went shopping in Paris in April when the euro came under pressure against the dollar.
“I’ve never seen anything like it in terms of price savings,” she told Reuters, estimating she’d bought a Birkin bag from Hermes in Paris for $4,000 less than it would have cost her in the United States. $9,000, also thanks to a tax refund.
“You can travel to Europe, soak up culture and buy a bag at the same time,” says Groner, who also bought handbags and accessories from Prada, Dior, Louis Vuitton and Chanel, for a total saving of $8,000 compared to US prices, based on of her calculations.
Monika Arora, founder of walletbop.com, a news and information website for luxury brands, said she believes the brands will eventually “harmonize” prices.
“They’ve done that before,” she said.
Chanel told Reuters in May that it could make further price hikes in July to account for currency movements — particularly the weakness of the euro — and inflation. read more
Paris’s appeal remains strong for American shoppers, even as New York’s high-end shopping streets are teeming with luxury European designer brands.
“So many of my friends are more than ever taking little weekend trips to Paris and other places and they’re shopping while they’re there — because that’s what you do while you’re in Paris,” said Jennifer Tumpowski, outside Gucci’s flagship store on New York’s Fifth Avenue.
Get all the latest news, breaking news, watch top videos and live TV here.